On October 2, 2024, the Second Department issued a decision in Parizat v. Meron, 2024 NY Slip Op. 04776, holding that an oral agreement regarding a party’s ownership interest in a company was not barred by the party’s written employment agreement, explaining:
The Supreme Court should have denied dismissal of the amended counterclaims seeking a declaratory judgment and alleging breach of an oral agreement pursuant to CPLR 3211(a)(1) and (7). When parties set down their agreement in a clear, complete document, their writing should as a rule be enforced according to its terms. Parol evidence—evidence outside the four corners of the document—is admissible only if a court finds an ambiguity in the contract. Further, where a contract contains a merger clause, a court is obliged to require full application of the parol evidence rule in order to bar the introduction of extrinsic evidence to vary or contradict the terms of the writing.
Nevertheless, a written agreement does not exclude proof of a parol collateral agreement made even between the same parties, where the written contract is not intended to embody the whole agreement and does not on its face purport to cover completely the subject-matter of the alleged collateral agreement. For a prior oral agreement to be enforceable, (1) the agreement must in form be a collateral one; (2) it must not contradict express or implied provisions of the written contract; (3) it must be one that parties would not ordinarily be expected to embody in the writing; or put in another way, an inspection of the written contract, read in the light of surrounding circumstances must not indicate that the writing appears to contain the engagements of the parties, and to define the object and measure the extent of such engagement. Or again, it must not be so clearly connected with the principal transaction as to be part and parcel of it.
Here, the consulting agreement did not completely cover the same subject matter as the alleged oral agreement, as the alleged oral agreement related to the formation and ownership of ION and the consulting agreement only related to the compensation that Ovadia would receive for performing certain marketing and sales services. Further, the alleged oral agreement did not vary, alter, or supplement any terms of the consulting agreement, which did not address ownership interests in ION. Moreover, it would not ordinarily be expected that the subject matter of the alleged oral agreement would be addressed in the consulting agreement.
(Internal quotations and citations omitted).